Wrap Text
Acquisition of African Unity Holdings
FINBOND GROUP LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER: 2001/015761/06)
SHARE CODE: FGL ISIN: ZAE00013895
(“FINBOND” OR “THE COMPANY”)
ACQUISITION OF AFRICAN UNITY HOLDINGS
1. Introduction
Shareholders are advised that Finbond Group Limited (“Finbond”) has entered
into a binding agreement with PSG Private Equity Proprietary Limited
(“PSGPE”); Rumiclox Proprietary Limited (“Thembeka”),(jointly the “PSG
Consortium”) HN Lombard Familie Trust (“Lombard Trust”) and with African
Unity Development Trust (“AUDT”) (collectively the “Vendors”) to acquire 660
ordinary shares that amounts to 66% of the outstanding ordinary share capital
of AIC Holding Company Proprietary Limited (“African Unity Holdings”). The
transaction above will be effected through a share repurchase by African
Unity Holdings of 66% of the ordinary shares held by the Vendors, followed by
a subscription of 66% of the ordinary shares in African Unity Holdings by
Finbond.
In addition to the aforementioned, Finbond entered into a separate agreement
to purchase a further 40 ordinary shares, that amounts to 4% of the
outstanding ordinary share capital of African Unity Holdings, from the
Lombard Trust and the AUDT.
2. Business of African Unity Holdings and Transaction Rationale
African Unity Holdings owns 100% of African Unity Insurance Limited and 50%
of African Unity Health (Pty) Limited. African Unity Holdings currently
provides Assistance, Life and Health Insurance products to more than 1,3
million members and policy-holders.
The transaction is in line with Finbond's strategy to grow the business
across a broader range of financial services that will enable Finbond to:
- Diversify its income streams;
- Cross-sell its current Unsecured Lending and Insurance products
to a vastly larger client base(1,3 million added members and
policy-holders);
- Achieve higher take-up when new services such as Transactional
Banking are launched; and
- Create further brand awareness in its identified target market.
3. Salient features of the Transaction
African Unity holdings will issue Finbond 660 new ordinary shares, amounting
to 66% of the issued share capital of African Unity Holdings, for a
subscription price of R141 900 000 payable in cash upon meeting all
conditions precedent to the transaction being fulfilled:
- African Unity holdings will repurchase all 490 ordinary shares
held by PSGPE, amounting to 49% of the issued share capital of
African Unity Holdings, for an amount of R105 350 000.
- African Unity holdings will repurchase all 160 ordinary shares held by
Thembeka, amounting to 16% of the issued share capital of African Unity
Holdings, for an amount of R34 400 000.
- African Unity holdings will repurchase 5 ordinary shares held by
Lombard Trust, amounting to 0.5% of the issued share capital of African
Unity Holdings, for an amount of R1 075 000.
- African Unity holdings will repurchase all 5 ordinary shares held by
AUDT, amounting to 0.5% of the issued share capital of African Unity
Holdings, for an amount of R1 075 000.
In addition to the aforementioned Finbond will purchase a further 40 ordinary
shares, that amounts to 4% of the outstanding ordinary share capital of
African Unity Holdings, from the Lombard Trust and the AUDT for an amount of
R 11 080 000.
- Finbond will purchase 20 ordinary shares from Lombard Trust, amounting
to 2% of the issued share capital of African Unity Holdings, for an
amount of R5 540 000.
- Finbond will purchase 20 ordinary shares from AUDT, amounting to 2% of
the issued share capital of African Unity Holdings, for an amount of
R5 540 000.
The effective date of both the Transactions is 1 June 2014.
Finbond will fund these transactions either from surplus cash or through a
secured debt facility from a local commercial bank.
The Transaction is conditional upon the fulfilment of the following
conditions precedent:
- Successful conclusion of the repurchase and subscription agreements;
- A successful due Diligence Investigation with no material adverse
findings;
- Finbond Board of approval;
- Approval from all the Boards of directors of all the respective parties
that constitute the PSG Consortium;
- Financial Services Board (FSB) Approval; and
- South African Competition Authorities approval.
The conditions precedent above have individual deadlines. However, the
ultimate long stop date for fulfilment of all the conditions precedent is 30
November 2014.
The Sellers have provided warranties and indemnities which are normal for a
transaction of this nature.
4. Financial information in respect of the Transaction
The unaudited pro forma financial effects, for which the directors are
responsible, are provided for illustrative purposes only to show the effect
of the Transaction on earnings per share and headline earnings per share as
if the Transaction had taken effect on 1 March 2013 and the effect of the
Transaction on net asset value and net tangible asset value per share as if
the Transaction had taken effect on 28 February 2014. Because of their
nature, the unaudited pro forma financial effects may not give a fair
presentation of the financial position and performance of Finbond. The
unaudited pro forma financial effects have been compiled from the audited
financial statements of African Unity Insurance Limited for the year ended 28
February 2014 and are presented in a manner consistent with the format and
accounting policies adopted by Finbond and have been adjusted as described in
the notes.
Before the After the Change
Transaction Transaction %
Earnings per share (cent) 6.1 7.5 23
Headline earnings per share (cents) 5.6 7.0 26
Net asset value per share (cents) 54.6 54.6 0
Tangible net asset value per share (cents) 44.3 32.4 -27
Shares in issue ('000) 605,025.25 605,025.25 0
Notes:
1. The "Before the Transaction" column reflects the audited results of
Finbond for the year ended 28 February 2014.
2. The "After the Transaction" column reflects what the results would have
been had the Transaction been effective as at 1 March 2013 for income
statement purposes or as 28 February 2014 for purposes of the statement of
financial position.
3. After taxation funding costs of R9.3 million and Securities transfer taxes
amounting to R 382,450 were assumed.
4. The attributable earnings of the target for the year amounted to R25.5
million.
5. The value of the investment in subsidiary will amount to R156.0 million,
which includes capitalised interest to the value of R2.7 million.
6. The net assets that are the subject of the Transaction amount to R59.2
million as at 28 February 2014.
5. Withdrawal of cautionary announcement
Finbond shareholders are advised that the cautionary announcement published
on SENS on 29 April 2014 is hereby withdrawn.
Pretoria
14 May 2014
Sponsor
Grindrod Bank Limited
Date: 14/05/2014 05:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
